Hello, is anyone out there?
By Dr. Donald McNeeley
The scorched-earth approach taken by both parties in the presidential primaries will make reconciliation impossible. What happened to the days where Republican Ronald Reagan could argue all day with Democrat Speaker of the House Tip O’Neill and then go solve matters of great importance over a beer, eschewing to perform for their colleagues or any media audience?
I want to support a candidate that supports us! This is the candidate that will create, promote and implement a national industrial policy. There is the drive-by mention from political podiums of returning jobs to America. But it ends there, with no offer or challenge to color up the specifics. They simply checked the box on the “must mention” list.
Our nation needs a robust manufacturing center. Every day it is the devastation or demise of one industrial company after another — often not only a company but entire industries. By some estimates, since just 2007, our nation has lost 20 percent of its manufacturing jobs.
Leadership, at its core, is to provide vision, a long-term strategy in the best interest of whatever constituency over which you have been given stewardship. In the case of our elected officials, that is the need to look beyond the next election. A need to surrender self-interest to that of the people as was undoubtedly pledged during the campaign. It is vital to our future that the elected leaders of a government focus on developing the vision of industrial and economic policy. In essence, it is critical to everything good about our great nation.
Often our politicians, hiding behind the illusion of being free market advocates, suggest that jobs displaced in one industry are redeployed in another. However, can our society and economy replace $70,000-a-year manufacturing jobs with $30,000-a-year service jobs and preserve the world class economy that has led to this nation’s unmatched wealth, which enabled investment, job creation research, charity, the lowest infant mortality rate and the longest life expectancy in the world?
Granted, the industrial sector and manufacturing, with investment, passion, pride, patriotism and ingenuity, have made great progress. Our manufacturing sector, in particular, is world class. This is, in part, validated by a recent emergence of “reshoring.” Reshoring, whereby some who moved offshore, only to have patents and trade secrets compromised, are coming back home. These wonderful gains in industry must be advanced by being coupled with a national industrial policy.
The Roosevelt Institute published a study outlining the importance of manufacturing to the economy at large. This study identifies six reasons manufacturing is critical to the economy:
- Manufacturing is the path to development.
- Manufacturing is the foundation of global power.
- Manufacturing is the most important cause of economic growth.
- Global trade is based on goods not services.
- Services are dependent upon manufacturing goods.
- Perhaps most important to all, manufacturing creates jobs.
An industrial policy with tax incentives for those who make industrial investment would pay great dividends. Drawing from the Roosevelt Study note, we entered the millennium with the manufacturing sector representing 13.4 percent of our U.S. economy, while in Japan, it is 20.2 percent, and in Germany 23.2 percent. If the U.S. were to increase their manufacturing footprint to just that of Japan’s, it would create 7 million more industrial jobs! These would be high-paying jobs, with great benefits, health care, retirement, etc. What it does, effectively, is expand the nation’s middle class, and there is nothing more beneficial to a country or economy than an expanding middle class.
In the book, “How Countries Got Rich … and Why Countries Stay Poor,” Erik Reinert concluded, “From the rise of England, to the rise of the U.S., Germany, Japan and the USSR in the 20th century, to the newly industrializing countries like Korea, Taiwan and now China, manufacturing has been the key to prosperity.”
Not so surprising to those of us who toil in the industrial sector and, as noted by Reinert, when the machinery industry goes, so goes great power. Those great powers of the world control 80 percent of machinery production. As is described in the research, successful, sustainable nations not only need to make things, but they also need to be able to make the machines that make things. In the 50s, the U.S. produced 50 percent of machine goods in the world. Now, we are less than China’s 16 percent.
To punctuate this a bit, isn’t it a fundamental priority for a government to protect its borders? How does one do this without a military, have a military without an arsenal, and have an arsenal without a manufacturing sector? Does anyone think we can simply subcontract manufacturing of our weapons offshore? To a potential enemy? Lest you think this is a theoretical scenario, try finding a precision ball bearing made in the U.S. ball bearings are essential to almost every critical application. Couple this with our nation’s decaying and dangerous infrastructure. It takes industry and vision to remedy these situations.
With Peabody Energy’s filing, we effectively have the nation’s coal industry in bankruptcy. The energy sector has lost $200 billion in market capitalization. The mining sector is imploding, and agriculture remains soft. The unemployment rate as referenced in the media does not account for part-time jobs being considered as full-time nor does it recognize under-employment, the latter being those who once made $60,000 and now make $30,000. Yes, they are employed, but with no residual disposable income, they do not participate in the discretionary spending critical in the economy.
I share this as frustration for I’m not certain if I’m just getting old and cranky or this particular primary is not only NOT a high water mark for our political process, but actually an international embarrassment. Then again, isn’t a hallmark of our freedom that we live in an environment where this is permissible? However, just because you can … doesn’t mean you should. Don’t we all know people who have the constitutional right to remain silent but not the ability?
In the end, I am an advocate for our nation’s industrial sector. Throughout our careers, we have made a significant contribution to our economy. The nation needs an industrial policy, and I will support the candidate who will further such. However, I still await even one of them to lay claim or even interest.
Notwithstanding the aforementioned, tomorrow we will earn profit, create jobs, pay taxes and fund charity even with the odds stacked against us modern day industrialists. I wish the government leadership would embrace the words of George Eliot who offered, “What do we live for if not to make life less difficult for each other?”
I leave you with this quote from Steve Martin, “A day without sunshine is like, you know, night.”
Dr. Donald McNeeley is president and CEO of Chicago Tube and Iron Co. (CT&I), headquartered in Romeoville, Illinios, as well as a Professor of Engineering at Northwestern University. Founded in 1914, CT&I is one of the largest steel service centers in the U.S., with 10 subsidiaries throughout the Midwest. Inventory, fabrication and processing is facilitated in over 1.2 million square feet of efficient, state-of-the-art facilities. CT&I houses over 30,000 line items of inventory from some of the world’s premier manufacturers. It has a 90-plus year history of consecutive profitability that has provided the necessary capital resources for growth. Contact Dr. McNeeley at (800) 972-0217, or visit www.chicagotube.com.